Current Events In Stupidland

It seems that Mr. Money Mustache attracts quite a few of the already converted. Every week I write out more of the biggest and most amazing secrets that have allowed me to hop effortlessly across the minefield of American Middle Class life and become rich at an early age. And you, the Mustachians, usually chime in saying “Yeah, Mr. Money Mustache, that’s some good shit, and I’m already doing it. Thanks for entertaining me by reminding me how smart I am.”

From reading the comments, you’d assume that the world is already fixed and it is time for ol’ Triple M to retire from blogging and find something else to do.

Until you step out of the air-conditioned comfort of this blog and the heat wave of the real world hits you in the face again.

Take, for example, this mainstream newspaper article that has been making the rounds in social media today:

The article tells us that most people in the US could not handle a $1000 emergency. Not only is their monthly budget tight enough that there isn’t $1000 of savings each month, which I would already find quite scary, but there isn’t even $1000 ANYWHERE in their lives to scrape together.

That could be explained if we were actually in a place with a shortage of money, or if the survey covered only people in a certain category, like the long-term unemployed. But no, this was a random survey, meaning average people, meaning an average income over $30,000.

The last time I had less than $1000 available was in April 1990. That’s because I had just started my first job working at the local gas station in March, and my $4.15 per hour wage only added up to about $120 per week since I was also attending high school full-time. Thus, it took me about eight weeks to get up to a thousand bucks.*

The reason I never dropped below $1000 is because YOU DON’T GO OUT AND BUY SHIT WHEN YOU HAVE LESS THAN A THOUSAND BUCKS!! NOTHING AT ALL!! IT’S AN EMERGENCY!!!!

At this level, you’re not allowed to buy yourself cigarettes, or any food other than bread, peanut butter, bananas and tap water.

You need to sell your car, and bike or walk to work, regardless of distance. You can’t have a cell phone, you can’t go to Target, you can’t drink a can of Coors Light, and you can’t even buy your kid a $2.00 toy.

These are all things that can wait until you have more than a thousand goddamn dollars, which you will very quickly if you are an Average Income American and you stop spending money even for one week. Then you continue saving most of your money until you are financially independent. If something insane happens and you ever drop below one grand, you go back to the start of this section and repeat.

But even that is not the scary part. The scary part is in the whiny complaint-laden comments made by readers after the article. Like this one:

“Is this a surprise to most people? Are Americans living in fantasy land? Americans are getting poorer andpoorer and the places to borrow money more and more inaccessib­le. A friend of mine were talking about the poor being too stupid to save, save WHAT?”

Nice, very nice. First, we are getting “poorer and poorer” (unless “andpoorer” is a word), but then places to borrow money are more inaccessible. Because… um.. borrowing money is the solution to your financial troubles when you are poor?

We are not getting poorer and poorer. Wages, by all measures and at all levels, have kept up with inflation through even recent decades. The wages of the rich have gone up much faster than inflation. Some people consider this an awful, unfair thing, saying “The wages of the middle class have stagnated since the 1970s”. But that’s silly, because we already had plenty as a society back then. We were just as happy. We don’t need to keep earning more and more, even if the ultra-rich continue to do so.

Now, I’m not just making fun of this “poor-old-me” attitude because I find it annoying. I also see much bigger consequences.

A people who spend so carelessly that they are always within $1000 of doom is going to have a very short-term view of the country’s future. Even a slight change in the price of gasoline, or corn, or other world commodities, or a recession, can send them down in flames.

With little understanding of world economics or politics, these people will naturally (but incorrectly) turn to the political party currently in power to place their blame. We’re seeing this now, with approval rates of Obama among the uneducated at incredibly low levels. I can guarantee that if gasoline happened to be $1.49 per gallon and unemployment was 4.2 percent, my man would be rolling in record approval rates.

But the President doesn’t set crude oil prices, nor does he dictate the short-term unemployment rate. So the only solution for these unfortunate politicians is to pander to the chronic overspenders, and pretend their problems are not their own. The political party which does this best, and most vigorously promises low gas prices and instant improvements in employment, wins. Despite the fact that low gas prices are actually awful for the country, and unemployment is controlled by the natural business cycle combined with longer-term effects of government policies (longer than a single presidential term).

It would be nice if the ultra-rich would use their money for social good instead of just passing on wealth to their offspring and buying jetskis, and to their credit, Warren Buffett and Bill Gates have done just that, giving more than 99% of their wealth back to humanity. But you’ll notice that they aren’t donating it to the American middle class so we can continue to “make ends meet” by buying tanks of gas for our 14MPG Chevrolet Silverados and keeping our cable TV service active. They’re using their money to fight malaria in Africa and provide medical care and education and birth control to families there. People in situations like that are the only ones allowed to complain that there isn’t enough money available in their society.

The rest have to shut up and start taking lessons from the Mustachians.

*Actually I admit this is an oversimplification. I already had at least $500 saved up before starting at the gas station, because I had also saved a portion of my $5 per week lawnmowing money and $30 per week paper route money for several years before starting at the gas station. Doing the math, you’d expect me to have thousands by the time 1990 rolled around, but you have to give me a break, I was only fifteen and thus still had 21 years of learning to do before becoming qualified to become Mr. Money Mustache. By the time I finished at the gas station and the subsequent convenience store, I had about $10,000, most of which I blew on my first year’s university education.

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Great article! I think the reason people who read your blog already are doing the things you suggest is because we are already interested in personal finance. This is the reason I was attracted to your blog in the first place and it is basically reaffirming to me that I’m on the right track.

I totally agree with your comments on those unable to save up $1,000. If you can’t save up $1,000 you are doing something wrong. Unfortunately I have a belief that the majority of Americans are idiots and therefore I can believe that they have trouble doing things that make sense financially.

Dear MMM:
I LOVE your blog. I discovered it a couple of weeks ago through My Dollar Plan and I have read all your articles since. You have changed my financial paradigms in every way. I keep reminding myself “a millionaire is made 10 bucks at a time”.
I consider myself a saver (not as hardcore as you, though) but about 4 years ago I ended up losing most of my 12-year savings due to poor investment choices and bad luck. I want to start all over again, but I feel sooo far behind of where I should be (financially) that I am sometimes discouraged.
So my questions is… has MMM ever made a financial mistake? I mean… one of those bad decisions that you later regret with all your heart?
It would certainly be motivating to know that you’ve also went through this kind of stuff… and have clearly recovered your path! :-)

The middle class is getting poorer, sadly. Indexed to inflation and comparing the amount of education one needs to earn a middle class income to the amount needed even a generation ago does worry me. Granted I do also think people expect more (cell phone, internet, tv etc) but the gap between the rich and poor is increasing and that not a good thing.

Ginger, I want the rich to get as rich as possible; forget trying to hold them back to some arbitrary limit to how much more rich they should be than the average. The more rich people, for the most part, the more good that was generated for society.

People of high net worth usually got that way because they did something great for our capitalist system that we all benefited from some way or another. Of course, there are exceptions to the rule, but it holds true far more often than not.

Are we talking about this idea of the rich being the “job creators”?
No one’s holding back the rich. They can still get rich. They’re just supposed to pay as much taxes as the rest of us. That’s all.
Letting them pay less taxes (as they have been in the U.S. for a decade now) has not resulted in a net benefit for the rest of society. If their wealth leads to job creation, where are the jobs?
When everyone pays their share, things work out better. I know that sounds like communism or something, but it’s just the way it is.

Even Mr. Money Mustache the Capitalist agrees somewhat here, even though I would express it with slightly different terms. I think that it is totally fair to let people become rich, especially when the riches are acquired through hard work and intelligence rather than simply corruption (such as Lobbying).

And I actually think it would be most “fair” if everyone paid for exactly the services they use in society – including environmental destruction, of course. Under this fair system, the ultra-rich would probably pay lower taxes, and middle class and poor might pay higher taxes. .. .BUT….

Even more important than moral fairness and ideological principles of fairness, is what actually WORKS with human nature. After studying the effects of societal changes over several generations. It turns out when you tax poor people instead of subsidizing and helping them, they end up suffering more, and dropping out of productive society and getting hooked into crime and causing even more poor people and poor democracy,

So, somewhat counterintuitively, if you tax the rich people for more than their fair share, and use it to subsidize health care, education, and other things that benefit society as a whole, the whole damn thing works better, and we manufacture more rich people and more fancy companies because we are all more educated and productive. The rich end up happier and richer, the poor end up happier and lower in numbers. That’s why I agree with Mr. Frugal Toque’s socialist leanings – because they actually end up creating even more riches.

For the most recent year with data available 2007, from lowest to highest fifths of household tax rates were 4, 10, 14, 17, 25. The top 10% pay 27 and the top 5% pay 28. The much heckled 1% paid 30% (rounded from 29.5 like all my figures here). That’s the highest rate of anyone!!! Going back to 1979 this is overwhelmingly true. State and local taxes vary, but in my experience they’re normally quite progressive too.

As you can see, over the last thirty years the Federal tax rate has been almost perfectly progressive (meaning higher earners are taxed at a higher rate). This is EFFECTIVE tax rate too, which means it’s what people actually pay after all deductions and loopholes. From listening to Warren Buffet’s hot air, you’d think he doesn’t realize he’s an extreme outlier. (I do respect him as an investor, but he isn’t a policymaker and totally misrepresented reality by implying his effective tax rate was typical in any way)

I am alright with the current tax system overall, but would prefer they get rid of the loopholes and gimmicky incentive boondoggles and just implement a simpler, cheaper system with similar progressiveness.

I think your comment depends on what your definition of “rich” is. If you are talking about the working rich who make a high salary for working a regular job, then that person already pays way more than his/her share. Those wages are typically W2 wages and subject to marginal tax rates. These tax rates are progressive, thus ensuring that that individual actually pays more than his/her so called “fair share”. Adding on to these ridiculously high rates, like the new tax rates for 2013 will do, is truly unfair. The goal of the government should be to constantly try to lower all taxes, but tax cuts SHOULD benefit high tax payers the most, as they pay the largest percentage of the taxes overall.

If you are talking about rich hedge fund managers and the like being paid millions of dollars and classifying that as dividend or capital gain income in order to pay lower taxes, then that is unfair taxation. Many other tax loopholes should be closed in order to get more of the ultra wealthy to pay a higher tax rate.

Maybe we need a system where lenders only lend people responsible amounts of money. Sure, it would be nice if everyone was wise enough not to put more on their credit cards than they can afford to pay off on their next paycheques, but is it really likely? Are people, en masse, really going to refuse the home mortgage that their bankers, brokers and agents tell them they can afford?
What if it worked like this:
“I really want a Cadillac Escalade. It will make me feel cool!”
“You only make $40k per year. We’re not lending you $80k for an asset that depreciates by 50% in 10 minutes.”
“But I really want one! Lend me the money!”
“No. Try a used Matrix.”
I’m pretty sure that’s how it used to be, in the Before Time.

I just hand a friend use Prosper.com (a lenderclub.com competitor) to borrow $3000 to pay off his credit cards and then buy a TV. We both make almost the same amount, he actually gets about $600 per month more than I do but I make up for it with tax returns due to investing in IRA’s and such, and we both enjoy most of the same activities, but I manage to stay out of debt and grow a nice ‘stache while he has been ever digging a new hole.

With 80k+ a year it can really be surprising how someone can manage to not have $1000 for in case the shit hits the fan.

I can.only agree, I am surpriced at how many people there are who are complaining they can hardly make ends meet while they are sitting at a coffee shop, with their laptop and new Iphone in hand. STUPID!!!

Yes there are poor people in the world but it is not the middleclass in America or Western Europe.

I have $1000 set as my goal for emergency savings. But I can never seem to keep my savings account at that level.

The reason isn’t because I can’t stop the temptation to buy crap. Quite the opposite. I can’t seem to avoid the temptation to invest all of my money!
Lending Club offers a bonus $100 if I invest at least $2500 this month.
Options House offers 100 free trades if I open an account with $3000.
The market just took a hit because of deficit negotiations, now is the time to buy.
And I end up transferring all of my emergency funds into this investment or that IRA, with the assumption that I will be able to earn that amount back in a couple weeks… but then before a couple weeks goes by, there is something new I find that I want to invest in.

And its not just the emergency fund that suffers. There are some tools I’ve been meaning to buy for my business, and some parts for my truck, but now that I am looking at each dollar as a potential “employee”, I find it much harder to hit the “buy” button at the bottom of the page after I do some research and find the lowest price of the stuff I want.

How do MMM and friends get over the mental block of feeling like spending any money at all is a “waste” of potential income?

I admit to the same problem, Bakari. I have a tendency to underspend, and sometimes feel tempted to buy less-costly products even when it is something I need and the higher-quality item would end up lasting longer and working better.

To counteract the tendency, I let the wife help me with decisions, and I remind myself of the dollar-value of my time. I have only the very top-end power tools, for example, because even if a saw saves me only a few minutes per workday by making better cuts, it will save thousands over its lifetime. I also place a dollar value on luxury-minutes. Like when I chose the $130 hotel for the family over the $60 hotel for one night last week, I figured it is only pennies per luxury-minute per person. We had such a blast, I feel I enhanced our net lives by over $1000 by making that decision. So you can still make a “profit” by spending money sometimes.

But only if it’s money you have. If you’re going further into debt to fund luxury, you are actually creating negative net lifetime pleasure, by forcing yourself to worry, suffer, and work more overall. My decisions became more luxurious only after I reached retirement.

I too have become addicted to investing. I justify it by saying to myself that I don’t do drugs, smoke, drink only socially and have no interest in gambling. If you were to have an addiction then you could do worse. It’s the one addiction that gives back!
With regards to tool spending, don’t sweat it. Tool spending is an investment in your home (in your case your business) and yourself.
Last night my wife opened our water bill and found it was four times the usual amount. A bit distressing for us having just gone through 10 or so years of drought and being very careful of every drop. Choice; Option 1: call a plumber or, Option 2: have a crack myself. Chose option 2. Found a wet patch on the ground and started digging. Found the leak, needed a few bits and pieces. Off to hardware. Bought a high quality socket & ratchet set for $80 (only 24 pieces, could have bought the 64 piece set for $300 but was more than I would ever use). Fixed the leak. Total cost of option 2 = $80. Potential cost of option 1 = North of $600…or more (for emergency callout). The bonus is I get to keep the tools!
Admittedly I was very, very lucky to find the leak and figure out how to fix it (inspired by MMM “How to Fix a Car”).
Anyway, I love this blog. Great job MMM. It’s great to know there are others out there. Keep up the good work!

Sounds like you are doing a good job investing all your excess funds. Only risk is if the market has a correction and then you need the funds. There are some credit cards that offer 0% intro rates. But you would have to keep finding and applying for new cards as each offer expires. A lot of work and things to track. Don’t know if MMM would approve of that approach. But Kudos on the investing, your on the right track.

I’ve had to start printing some of your articles because they are so ‘on point’! Totally motivating! My Money Mustache is small but I can almost feel it growing when I read some of my favorite posts! Keep it up!

But MMM, it’s so hard to save $1k when there is a new iPhone coming out this fall? Oh and did you hear Starbucks just came out with the mocha-peanut-butter & jelly frappachino? You have to try it! (sarcasm off)

I have the same problem as Bakari – I hate having cash sitting in savings when great stocks like JNJ, PEP, BA, etc are dropping 5% daily.

I think there are a few reasons why people who SHOULD have access to $1,000 — DON’T.

First, Americans lack education. I think money management needs to be taught in schools at an early age. Clearly, a lot of parents aren’t teaching their children the basics.

Second, Americans lack will power. They seek instant gratification. When they see something they like on TV, they go buy it. It’s a buy now, figure out how to pay for it later, society.

Thirdly, Americans make poor decisions. I just had a conversation today with a friend whose friend is getting married to a man who has a lot of debt. Then there’s people who choose to have child after child, getting deeper into debt. Or if it’s not children, it’s pets. These things all cost money and if you can’t afford kids, stop having them. If you are engaged, get out of debt before you get married.

And I agree with the first post. This site is a great motivational tool, but unfortunately, the people mentioned in that article are probably not reading it — or any other PF blog.

Mike, there was an article on Yahoo News a few days ago about 3 families who earn more than $100k a year drowning in debt. They all had similar themes: couldn’t budget, put the high life on credit cards, then lost their job or got stuck with an underwater mcmansion. One couple has $60k in student loan debt, just got a $100k job (in D.C.) only to get pregnant and had to take some time off, She contributes 1% to her 401K, but has nothing in savings. Then here’s the kicker: “as for emergency savings, I have none. None. All of our disposable income is going toward the cost of our wedding at this point.”

A WEDDING!!! I was literally yelling at the computer. She can barely feed her kid and she wants to spend money on a wedding. Go find a judge and be done with it.

Greetings from the Future!
I know this is years later, but your comment is still completely relevant!
I *literally* have half a dozen friends who earn $100k-350k and are less than 6 months of employment away from “homeless”. Same friends have no problem ponying up $1000, especially if it’s for cheap flights to Europe (AmEx has Platinum for a reason…)

I finished “The Millionaire Next Door” – excellent book that sums up this whole “high income, completely broke” mess.
The book also makes you feel like a badass for saving :D

I disagree that money management should be taught in schools. I believe that money management needs to be taught at home. What parents do is what their children will tend to do. If parents tend to buy all their meals at a restaurant, then kids will follow suit. If parents tend to buy the latest and bestest car, it will follow that the child will have the tendency to do the same. If parents tend to fork out dollar bills whenever kids ask for it, then the kids will grow up thinking that that’s how things work. If parents tend to let their kids have no responsibilities or requirements to work and have a sample of what real life is like by constantly bailing them out when they do stupid things, then can you imagine what the child will grow up to be? Yes, they may have a class or two or even a course on money management, but the place where it becomes more practical and relatable to real life is in the home.

I agree that money management needs to be taught at home, but I am also for teaching money management in schools. In the event that someone is stuck with a non-Mustachian family, the simple *IDEA* that their lifestyle which is preventing them from FI could be turned around is powerful. It could even start with that family member and ‘convert’ his/her family and friends.

Let’s not underestimate the power of an idea via awareness / education :)

I’m continually baffled that proposing better financial education in schools is almost always countered by “That’s the parents’ job!”. Why is it a good idea to make parents the sole source of economic education when most of them can’t even scrape together $1000 in an emergency? You are spot on about kids picking up on bad spending habits from their parents. But if the parents spending habits are terrible, likely because their own parents did not provide them with a proper financial education, how do you break that cycle without some external source of financial education?

It’s not like we are talking about a small percentage of families either. Articles like the one in the blog post indicate that this lack of financial literacy is the norm, not the outlier. Doesn’t that make it seem like our current system, leaving it to parents educate their kids about money, is failing?

I think in the U.S we make two huge mistakes when it comes to educating people about money:
1) We leave financial education to parents, allowing bad habits to be passed from generation to generation and creating cycles of financial hardship.
2) Many families handle money with a sense of secrecy, often hiding details from their children as to not worry them or let them feel ‘poor’. Not only does it deny the child a chance to learn, but it also often drives parents, who are struggling to keep up appearances, deeper and deeper into debt.

I’m sorry, I just can’t get this post out of my head. I’m just saddened by the tone. If you call people stupid, they will act stupid. If you call on their ability to innovate and be entrepreneurs, what makes this country great, then they will rise to the occasion. Okay, will try to not post anymore.

You are right and very wise, Melissa. This particular post is a good ol-fashioned rant, and it’s not going to change the mind of people who currently think the world is out to get them – displaying the attitude I call “stupid”. I know you can’t affect social change by just ranting against your enemy. And I do want to cause at least a little bit of social change someday. But sometimes, like with this post, we like to stop and have some fun as well. Thanks for making that excellent point.

To really make a change in this particular area, I think we have to teach people about the actual principles of both macroeconomics and personal finance, and encourage them to use this new knowledge both when considering buying things, and when voting for political candidates.

Mr. Money Mustache feels that one way to motivate people is with the reward of riches and early retirement. That’s why I usually talk about those things, instead of just ranting about how stupid things currently are.

I apologize again. I’ve had my fair share of ranting elsewhere and in the past and I am trying to figure out for myself what is the next step. This comes from a place of many years of sociological research on behavioral change. In particular, I study climate change, and scientists like to stay Americans are stupid when it comes to the environment. I disagree. I don’t think there is any incentive for people to change, just like there is no incentive to give up your coffee if you have a credit card. But going back to individualistic explanations, the person you see in the cafe using status symbols to signify wealth when they know they can’t afford it needs to go to the 100th job interview looking “presentable” and not homeless. I’m sure they know full well they will be saving money if they sat in a dark closet all day eating peanut butter out of the jar, just like people are still living in New Orleans even though they know full well they will be permanently underwater in 80 years. You can’t sacrifice your life just because you live in a stupid system that doesn’t provide social buffers or environmental buffers. I agree that many people spend frivolously, we all get that. I agree that I spend frivolously for that matter! But if that were the end of the story, there would be a very simple solution. Unfortunately the economic crisis we’re experiencing goes far deeper than that, and we need to look at the root causes – not bashing each other, but thinking creatively – and in my perfect world – thinking across country borders and across disciplines – because the environment (or lack thereof) ultimately determines the economy. I for one would love to hear more about your macroeconomic and personal finance expertise so people can be “smarter” about the system we live in. (and hopefully learn how to game it!) Damn, I guess I just used your blog for my own soapbox. I owe you a beer.

It seems we have about the same background ;), still I couldn’t disagree more with what you write. Which system are you thinking of should and could relieve people from the necessity to have some emergency savings? Honestly that’s really beyond me, even as a European. If someone doesn’t understand the necessity to have some savings on the side, I don’t know what system could help that person. But if you understand it, then you have already all the incentives necessary to change your behaviour. So one tip could be to leave your credit card at home, because there is pretty profound research showing that people tend to spend more money if they pay by credit card instead of paying with cash. Giving up notes and coins seems to be more painful a process than to pull a plastic card through a mashine. Guess, for the average UK/US person that would be enough behavioural ‘change’ to save up a 1 000 quids/dollars in a couple of month.

Another great post, as always. :) One small correction, though: you misspelled Warren Buffett’s last name. It’s spelled Buffett (with two T’s) and pronounced “buff it,” not “Buffet” as in “all-you-can-eat buffet.” Sorry – I’m just a big fan of the man and a former copy editor, so it always irks me when people butcher his last name…

By the way, MMM, have you ever been to Buffett’s annual shareholder convention in Omaha? They call it Woodstock for Capitalists, and I think it’s perfect for Mustachians everywhere. :^D

Thanks for the typo correction, GL, I have now fixed it. I do actually know how to spell His name, and I’m also a big fan (I even read every page, including all appendices and footnotes, of His 800-page biography called “The Snowball”). I am a small-time Berkshire shareholder and have always wanted to attend the convention. I think about it each time I pass through Omaha on the way from Colorado to Ontario.

I especially liked this post – and agree that you should submit it as a freelancer somewhere and see if you can get it picked up. But I have no clue how you would do that, but it’s worth a shot! I also appreciated the laughs in here today (on the parts that are meant to be funny, not the serious political stuff of which I have no knowledge, or claim that, anyway).

Wow, terrific article I wish some of my family members would read this blog… Oh how sad it makes me to hear those exact words coming out of their mouths. Shame but we all know what this is about; the fact that people (weaker, like myself a few years ago) are sucked into the commercial bombardment that we have to deal with today, everyday. They believe that if they don’t have this or that nifty thing-a-ma-bob that they aren’t worth anything… Sad but it’s true wouldn’t you say? That’s what drives individuals to live WAY beyond their means.

Wow, this is an excellent post! I am so saddened by people I know that not only don’t have $1,000 saved up – they don’t even seem to understand that they need it (and I am talking about people who are older, with grown children, and thus should have some understanding of financial realities).

Example: I talked to a member of my extended family (who fits in the above demographic) a few months ago. She was mentioning (not even with regret) their need to go to a payday-loan company so they could come up with $84.00. EIGHTY-FOUR DOLLARS! And what was the emergency? Their dog needed to go to the vet!

Now, I love dogs, and I understand their value in society, and once you have one, yes, you should take it to the vet when necessary. But why in the world did these people have a dog? I could probably dig around in my couch cushions and come up with $84.00. I just hated so much to hear that they were headed for so much more trouble, because if they don’t grasp the financial realities of their life, they are unlikely to do so in the future, given their age. No, I didn’t offer to pay their bill, or even loan the money to them. Not that I don’t like them, but there are some problems you just can’t fix, and when you see someone drowning (due to their own stupidity), it does no good to jump in the ocean with them!

Keep on with your words of wisdom, Mr. MM, but I wonder: what ‘honor’ do you bestow upon your female commenters like me, since having a mustache isn’t exactly a valued goal? :-)

To keep the initials, one might try Ms. Money Merkin. But then, most wouldn’t show that off. Still, I’ve been told that wearing sexy underwear under jeans makes the wearer feel better because she “knows” she’s got it, and maybe this could be similar ….

I have an in-law with pets (and pet expenses) and no apparent capacity to save; I feel your pain. The single responsible person in the households of my in-laws creates an opportunity for some small consolation: short-term zero-interest loans can be a source of profit when one uses a cash-back credit card to make the loan expenditure. You earn the 1% from the credit card in about the same month time frame needed to get the small-potatoes loan repaid, so you’re not out a net. If there were a way to do this in large volume there’d be a cottage industry :-)

I needed to comment because you need to know what you’re doing is 100% agreed with. You are speaking the truth and people need to realize it is not political control that is enslaving them, it is their own personal consumption ideology.

This kind of honest and brutal ranting is exactly what people need to punch themselves in the face with on a daily basis. I’m going to spread this particular post around. I only hope it can snap people out of their whining / brainwashed ultra-consumer mindset.

I’m a bit confused. Should I be trying to save up the $1000.00 emergency money at the same time I’m working at paying off my debts? There just isn’t enough money to do both at the same time. It scares me every time I think about the fact that a $1000.00 emergency could undo all the progress I’ve made so far paying down debt. I’m definitely a work in progress, but at least I feel I’m progressing.

There is no one simple right answer to that question. Even on the Mustache forum there is plenty of debate about emergency funds.
Just my own personal take is that any debt you pay off on a revolving account (credit card, home equity, etc) is essentially an emergency fund.
If, for example, you have maxed out your credit, and then several months later manage to pay off $1000, then that is $1000 you have available for an emergency.
Of course your goal is to pay off debt and then never incur it again, but remember we are talking about an EMERGENCY fund. You would only ever use it in an actual emergency. Most of the time, an emergency will never come up, and you can just focus on paying down more debt, but if one did, you have that option. You even have 30 days to pay it off again without paying any interest on it.
In fact, even once you have 0 debt, it is still a reasonable strategy to use credit as you emergency fund, so you don’t have cash sitting around not earning any dividends. The 30 days it takes to incur finance charges is enough time to liquidate some investments in order to pay it off.

Other people’s opinion will vary. Try the forum (link at the top of the blog) if you want to hear some of those too

I just found the blog a week ago and have been binge-reading since the beginning! LOVE it, hugely inspiring, at least to me – the other half still needs some convincing ;) BUT – we learned the hard way that a credit card is not enough as an emergency fund.

My husband lost his job last year and has since started his own business. With no income for nearly a year, at some point we ran out of savings. We had been using our one and only credit card and paying as much as we could toward the balance each month. Then, catastrophe hit: his (our) credit card info was stolen/misused, and the bank shut down the card and sent us a new one – which took nearly 2 weeks. For that entire time, we had no credit card and no money in the bank. Felt completely powerless, and never want to go there again. We have since put $1,000 in the savings account and will never, ever, ever touch it again – the peace of mind is worth every penny that money could earn us elsewhere.

Update: We got a home-equity line of credit of $25,000, so that is now our emergency fund – no more need for a thousand bucks to sit idle in an account. And by the way, our credit card number was misused once again this week and our account shut off – it’s the 4th time in 5 years. People suck.

How I wish I had discovered this blog ~11 years ago (before it existed, I know). Extreme early retirement somehow never dawned on me until I ran into this blog (directed from MarksDailyApple) almost two weeks ago, despite reading about personal finance for years. I’ve been reading the posts from the beginning (with a few others thrown in) daily ever since.

So much of what you say makes sense, but as you mentioned in an early paragraph here, the people reading blogs like this already “get” it. The challenge becomes when your spouse doesn’t. When I look at many couples in my family, there is almost always a person who gets it and a person who doesn’t. I’ve seen very few people (actually no one) ever “convince” the person who doesn’t get it to change their spendy ways. I read ahead to your posts on is MMM ruining your marriage, which had suggestions. The challenge (and all of the emotion this challenge regularly generates) is, though, if your spouse agrees with the end vision (at least claims to), but not enough to make the daily decisions/sacrifices required to reach said vision. I’m trying several strategies and hope to reach the success I see that some commenters here did reach with an initially resisting spouse.

Hey again…. Maybe you have answered this and if you have, please pardon the repetitive mention….
First off- Knocking it out of the park you are. I agree with a lot of the goods you sayand believe in low cost total stock market index fund investing
Second off- the question: Do you ever feel a pit in the stomach for investing/giving money to the (some not all) corporations that you disagree with? If the investments are towards the total market as a whole, than aren’t we supporting those “boxes” we very well shame/get disgusted over/ dislike/ roll eyes are? Thoughts?

I get a slight shitty feeling about it sometimes

Yet, from another perspective we are supporting the growing of our country along with positive, forward moving businesses as well.

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